NIFTY LONG-TERM VIEW: VERY BIG RANGE- 10500-6750
TECHNICALLY, NIFTY IS DEFINITELY IN BULLS GRIP SO LONG AS IT TRADES ABOVE 8620 LEVELS AND STAYS ABOVE 8909, HAS THE POTENTIAL TO CROSS 9250, EVEN CAN TOUCH 9480 LEVELS WITHOUT MUCH RESISTANCE FROM BEARS. BUT FROM THERE??. AS OF NOW, THERE IS NO IMMEDIATE THREAT TO THE CURRENT TREND, BUT AS TIME ELAPSED, DISTRIBUTION TAKES PLACE....
BULLS NEVER LIKE THE MARKETS TO FALL, UNLESS FOR A “BEAR TRAP”, SIMILARLY NO INVESTOR APPRECIATES THE FALL, WHILE ON THE OTHER-HAND NEVER QUESTIONS HIMSELF/HERSELF-“WHO WOULD BUY FROM ME FOR A HIGHER PRICE?”.THE STOCK-MARKETS DO CONSIDER THE EMOTIONAL STRENGTH OF BUYING, NORMALLY CALLED AS “IMPROVED SENTIMENT!” WITH A HIGH INFLOW OF LIQUIDITY INTO MARKETS AND WILL MOVE IN LINE WITH THE SAID FORCE. NEVER THE LESS AND ULTIMATELY, THE CORPORATE EARNINGS WILL DECIDE &DICTATE THE FUTURE TREND.
THE STOCK MARKETS LOVE OVER ALL ECONOMIC GROWTH COUPLED WITH CORPORATE EARNINGS. ALL OTHER FACTORS LIKE POLICY DECISIONS AND ANY SUCH OTHER MEASURES ARE INTENDED TO IMPROVE THE ECONOMY, THERE BY CORPORATE EARNINGS. THE MARKETS DO RESPECT A SMALL LAG OR A BIT SLOW UP-TICK IN THE OVER ALL ECONOMIC ACTIVITY, BUT CAN’T IGNORE THE EARNINGS IMPORTANCE IN THE STOCK/MARKET VALUATIONS!!.
THE MARKETS NORMALLY FLUCTUATE SOMETIMES TO HIGH AND SOMETIMES TO LOW, AS THE PUSH & PULL GENERATED BY THE BULLS & BEARS, DUE TO "DEMAND & SUPPLY"SITUATION, DEVELOPS “SWING” IS A VERY NATURAL PHENOMENON IN THE STOCK MARKETS. BUT MOST OF THE TIMES THE ARDENT BULLS OR BEARS TEND TO STICK TO “THE CURRENT TREND” WITH A STRINGENT VIEW/ PERCEPTION, THE EXISTING TREND HOLDS GOOD FOR A LONG RUN, REALLY FOR A LONG PERIOD. WHERE AS BEARS, IN OTHER SENSE, ENCOURAGE BULLS TO RUN THE TURF BLINDLY SO THAT THE HIGHER LEVEL SELLING CAN OFFER MORE PROFITS THAN GIVING A TOUGH FIGHT FOR A SMALL BOUNDARY. LIKEWISE, SIMILAR CONDITIONS PREVAIL WHEN GLOOM&DOOM WIDE SPREAD ACROSS, PESSIMIST VIEWS DOMINATE THE MARKETS, BEARS KEEP BLIND EYE TO GREEN SHOOTS, LATER GET CRUSHED!.
MY YESTERDAY POST: “NIFTY STRUGGLING TO STAY ABOVE 8900, NOW ANY FALL BELOW 8760, SERIES OF SUPPORTS AT 8280,THEN 7850-CRUCIAL,ANY FALL LEADS TO 6760-6930 RANGE!!”
NOW, NIFTY IS TRADING AT P/E RATIO IS AT 23.9, PRICE TO BOOK VALUE IS 3.8. THE NORMAL COMFORT LEVELS OF P/E ARE ALWAYS AT 16-19 TIMES THE EARNINGS. LIKE THAT, BSE-SENSEX IS CURRENTLY TRADING AT P/E RATIO IS @ 20.02, PRICE TO BOOK VALUE IS 3.13. THE USUAL AND USEFUL COMFORT LEVELS ARE AT 15-18 TIMES THE EARNINGS!. AT TIMES, WHEN THE PESSIMISTIC SCENARIO EXISTED, SENSEX EVEN TRADED BELOW 12, ALSO. SO MOVING FROM HERE WITH CURRENT EARNINGS AS BACK-DROP, AND WITHOUT SUBSTANTIAL,SUSTAINED GROWTH PROSPECTS IN NEAR FUTURE, DIFFICULT TO SUSTAIN THE CURRENT TREND!. THE FUNDAMENTALS HAS TO SUPPORT THE TREND FROM HERE, NOT MERE STATEMENTS OF FORWARD/PROJECTED EARNINGS!.
SO, IF WE CONSIDER A VERY POSITIVE SCENARIO, THEN NIFTY MAY TOUCH 10470 WITH P/E@28, OR IF WE TAKE A GOOD SCENARIO, THEN NIFTY MAY TOUCH 9720 WITH P/E@26,
LIKE THAT, IF WE TAKE A CORRECTIVE SCENARIO, THEN NIFTY MAY TOUCH 7480 WITH P/E@20, AND IF WE CONSIDER A PESSIMISTIC/BAD GLOBAL/LOCAL SITUATIONS MAY COMPEL, THEN NIFTY MAY TOUCH 6730 WITH P/E@18.
AT CURRENT VALUATIONS, THOSE WHO CAN EFFICIENTLY TRADE, CAN MAKE MONEY ON BOTH THE SIDES/MOVES, JUST SWITCHING THE PARTY AS AND WHEN REQUIRED/DEMANDED. WHERE AS THE RETAIL INVESTORS, WHO HAS LIMITED RESOURCES SHALL NOT GO FOR SHOPPING WITH BORROWED MONEY/HIGHLY LEVERAGED RESOURCES. THE REGULAR SAVINGS CAN BE INVESTED AS THEY CAN AVERAGE IN CASE OF NECESSITY. BUT, THOSE ARE ACTIVELY SELLING THE PROFITABLE STOCKS TO RE-INVEST FOR EXTRA MONEY, THINKING/PRESUMING SUCH MOVE AS A SMART STRATEGY, SHALL RESTRAIN FROM DOING SO. THESE EMOTIONALLY ENTHUSIASTIC “WISHFUL-THINKING-INVESTORS” DO RAPIDLY CHURN THEIR PORTFOLIOS FOR EXTRA PROFITS. THEY DO IT AGAIN AND AGAIN, RE-INVEST IN SOME OTHER UNDER-PERFORMING STOCKS, THINKING WILL FOLLOW THE TREND,LATER!. NORMALLY THESE INVESTORS ARE “YELL ON SUCCESS” OPEN TO SWEET-NEWS BUT BLIND TO FUTURE “HAPPENINGS”, EVENTUALLY, GET TRAPPED!.
IT IS NO BIG SURPRISE TO PSYCHOLOGISTS, ARE SERIOUSLY ANALYZING MARKET BEHAVIORS, STUDY INVESTORS PSYCHOLOGY, MANY A TIMES IN THE PAST PRONOUNCED THEIR RESULTS, THAT MOST RETAIL INVESTORS IN STOCK-MARKETS CLING/GLUE TO A PSYCHOLOGICAL -“ATTACHMENT"TO CURRENT TRENDS!, BELIEVING A PERSISTENT BULL RUN WILL BE MAINTAINED AND TEND TO BELIEVE THEIR PAST EXPERIENCES AND INVESTMENTS SUCCESS WILL BE REPEATED AND WILL CONTINUE!!. THEY ENCOURAGE THEMSELVES TO ARGUE WITH THE DOWN TREND TICKER, EVEN IF THERE IS A SERIOUS FALL. THEY DOUBLE/TRIPLE THEIR BETS, CLAIM THAT MARKETS WILL BOUNCE WITH VIGOR, CONSIDER EACH CORRECTION IS AN OPPORTUNITY TO BUY AND MARKETS WILL RESUME THEIR EARLIER UP-TRENDS. THE WHOLE MARKET VALUATIONS TAKE AN ABRUPT "U" TURN, SURPRISINGLY, CHANGE/ADJUST WHEN ABERRATIONAL PRICE RISE HAPPENS BEYOND NORMAL/REASONABLE VALUATIONS, SPOIL THE WHOLE PARTY. AT THE END, WHO ENJOYS "THE ADVANTAGE OF THE BULL RUN" IS A WELL KNOWN FACT, LIKE- WRITING ON THE WALL!
THE THIRD QUARTER EARNINGS, A BIG DISAPPOINTMENT TO MANY ANALYSTS, NOW IN Q-4, SIMILAR POOR PERFORMANCE WILL BRING BACK TO THE COMFORT LEVELS. SO CAUTION IS ADVISED TO RETAIL INVESTORS WHO GENERALLY CARRY “THE HABIT OF CHASING STOCKS FOR QUICK GAINS”. THE INVESTORS CAN BUY HIGH P/E RATIO COMPANIES, NOT ONLY BECAUSE THEY ARE WORTH BUYING BUT DEFINITELY WILL “STAY IN HIGH-BUSINESS POTENTIAL AREAS”, TEND TOOFFER GOOD LONG-TERM RETURNS. BUT, THESE COUNTERS ARE MOSTLY PREFERRED BY INSTITUTIONS WHO CAN WAIT& AVERAGE OVER A LONG PERIOD THAN USUAL.
NOW, BULLS DOMINATE THE STREETS, INDEX IS REGULARLY CLIMBING AND NEWS HEADLINES COVERING “ALL GOOD FACTORS” ATTRACTING SMALL INVESTORS, WITH LIMITED RESOURCES & INFORMATION, WITH A VIEW ON SHORT-TERM GAINS, JUMP TO INVEST WITH LITTLE UNDERSTANDING OF THE RUN-UP HISTORY OR THE LEFT OVER POTENTIAL TO PERFORM FURTHER, MAY BECOME “PREY”. THE ECONOMY MAY DO WELL, EARNINGS MAY IMPROVE IN FUTURE, BUT CURRENT VALUATIONS IN SOME HIGH P/E COUNTERS MAY NOT BE "AWARDED" AS COMPANY SPECIFIC POSITIVES ALREADY DISCOUNTED, LONG AGO!.
THE RETAIL INVESTORS WHO ARE TEMPTED TO CHASE THESE VOLATILE COUNTERS, FORCED TO BECOME & ACT AS “A WAREHOUSE TO HOARD THE STOCK” FOR HNIs/INSTITUTIONS FOR SOME TIME. UNFORTUNATELY, THESE INVESTORS DECLARE THAT THEY BOUGHT IT FOR LONG-TERM, AS SCRIP CARRIES "HUGE POTENTIAL"!. THIS UN-SOLICITED BUYING AT HIGH PRICE/VALUATIONS, LATER REALIZE THAT THEY"GOT TRAPPED". THE MATH WORKS LIKE THIS, ONE NEEDS TO UNDERSTAND THE BASIC PRINCIPLE OF "CASH-INFLATION-TIME & STOCK VALUE". THESE INVESTORS SUPPLIED/EXCHANGED HARD CASH, RECEIVED UN-MATURED PAPER. MOST OF THE TIMES, THESE INVESTORS HAS TO CARRY THE PAINS FOR EVEN MORE THAN 5-8 YEARS. JUST CALCULATE A SIMPLE BANK INTEREST FOR A FIXED DEPOSIT FOR THAT PERIOD, MAY GET DOUBLE THE MONEY. SO,THE STOCK HAS TO DOUBLE DURING THE HOLDING PERIOD, OTHERWISE A BIG LOSS AND A LOT MORE FRUSTRATIONS TO SUFFER!!!.
THE MAJOR PSYCHOLOGICAL CONSTRAINTS TO RETAIL INVESTORS WHILE REAPING PROFITS IN STOCK MARKETS ARE THE DIE-HARD HABITS LIKE "LURE/TEMPTATIONS" COUPLED WITH LACK OF CLARITY OVER INVESTMENT TIME PERIOD WHETHER IT IS FOR SHORT-TERM/MEDIUM TERM & LONG-TERM. THEY BUY WITH A PURPOSE, MEAN WHILE SOME OTHER STOCK PERFORMS, SO "SELL THIS AND BUY THAT",AFTER A FEW YEARS OF HOLDING!, THEN AGAIN A REVERSE EXCHANGE!. MANY EXPERTS ADVISE CAUTION ON TOO MUCH CHURNING AS THE "RAMPANT CHURN&CHASE STOCKS" CONCEPT YIELD LITTLE POSITIVE RESULTS TO INVESTORS, FINANCIALLY!!.
SO, PLEASE BUY QUALITY NAMES WITH REASONABLE P/E ALONG WITH GOOD POTENTIAL TO OUT-PERFORM IN FUTURE. IF YOU CAN'T FIND OUT ANY SUCH STOCKS, BETTER STAY AWAY!!!

PAST BULL RUN SOME HIGH P/E COMPANIES NOT SUPPORTED BY FUNDAMENTALS,BUSTED!!, NOW EVEN CONCERNED AUTHORITIES NOT ABLE TO TRACE/LOCATE ..........